Buyers are running up against a shortage of properties for sale again this year. Sales are about 35% slower than 2021 – and buyers looking for homes simply can’t buy something that isn’t available. There just aren’t enough homes available to purchase that would help drive prices down as mortgage rates have increased.
Banks are capital-rich and aren’t under pressure like they were in the previous real estate correction of 2008. Serious delinquency rates that can lead to foreclosures and more home inventory are running less than 0.7% of all mortgages. And household debt payment burdens are near historic lows. 85% of area homeowners are enjoying low housing costs with mortgage loans under 3.875%. Unemployment is being measured at the lowest rate in over 50 years. All of this allows homeowners to easily hang on to their current homes. Homes for sale today are limited to traditional reasons: job transfer, retirement, divorce, and a limited number of people that are moving up to a larger home, or a move to the dream location they can now afford.
Let’s talk about Cypress, California. In 2021 there were 497 homes sold in Cypress – close to the annual average. In 2022, the number of home sales dropped to 322 in Cypress – near the lowest turnover in the past 50 years. This includes all condos, townhomes, and houses. This continued lack of housing inventory is supporting home values. Today, there are only 25 homes listed for sale in Cypress. This is less than 50% of the average in February over the past 30 years for Cypress homes for sale. And this low inventory of available homes is similar throughout Orange County.
If mortgage rates dip below 5%, a psychological watermark for many homebuyers, then more owners with low mortgage rates would feel comfortable giving up their current loan – and likely put their homes up for sale to make a move. Lower rates also boost the buying power for buyers. For every 1% drop in the interest rate, a buyer can afford to borrow 10% more on their home loan – about $75,000 more in the current market. If mortgage rates soften later this year as many economists believe will happen, that’s going excite more buyers to move forward with their home purchase – and more sellers to trade into their next home.
Why mortgage rates have recently edged up slightly
One of the main drivers of the mortgage rate increase was the U.S. Federal Reserve. The Fed has been hiking its own rates to slow down the economy in an effort to lower inflation. And investors now believe the Fed will jack up their rates for longer than originally anticipated due to the better-than-expected unemployment report indicating the economy remains strong. The market is seeing a bump up in mortgage rates, and this is expected to continue over the next few months – before possibly softening again late in the year. The Fed has been clear they want to see slowing in the housing market. It will be interesting to see if the number of homes for sale increases in Orange County over the next few months like it has in other major markets. So far, Orange County inventory of homes for sale is averaging 50% of normal. This low inventory of homes is maintaining the balance between buyer demand and supply.
If you are considering a move in 2023, give me a call. I can share the latest information on the current real estate market, and we can review the best options for you.
Working with an experienced real estate agent is critical in this market to insure you receive the most profit when selling. I have personally sold over 1,000 homes in Cypress, and know every neighborhood well. That’s an experience you can trust. We can provide the latest information to insure you receive the highest price for your home. Call me directly at 1-800-944-2441 or email: Cary@Cary4Homes.com. And of course, all of our conversations are confidential. Let’s talk soon.
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We currently have buyers looking to purchase a Cypress home from $800,000 to $1.7 million.
Call Cary direct at 1-800-944-2441 or email: Cary@Cary4Homes.com. We can review your best options to insure you receive the most profit when selling.